Paris (awp / afp) – Faced with the coronavirus, the French shopping center giants are in a delicate situation. The controversy drags on in the face of traders who demand to cancel their rents, and the government now wants to limit the opening of large centers for a long time.
The two French giants of the sector, Unibail-Rodamco-Westfield (URW), owner of the Forum des Halles in Paris or Part-Dieu in Lyon, and Klépierre, owner of Créteil Soleil, each published their quarterly figures on Wednesday.
They each own around a hundred large shopping centers across several countries, with a marked presence in France. Klépierre is mainly active in Europe, while URW, the sole real estate company in the CAC 40, also has a foothold in the United States.
For the time being, their accounts have been little affected by the Covid-19 crisis, in which many countries, such as France, have imposed the closure of most of the stores.
In the first quarter, revenues from URW and Klépierre increased by 1.7% to 790.3 million euros and a decrease of 4.7% to 252.8 million euros, respectively.
But these developments are misleading because containment began in mid-March, when the quarter was almost over.
“The Covid-19 had only a limited effect on the group’s revenues in the first quarter because rents are invoiced and paid in advance by one quarter in most of Europe, and by one month in the States United, “said URW.
“The effect of the pandemic will be reflected in the second quarter,” warned the group, which had already managed since 2018 the heavy acquisition, for around twenty billion euros, of the Westfield group.
In this context, the two giants, whose managers also give up part of their salaries, refrain from any forecast figures on their accounts.
However, they take care to take a reassuring tone, detailing for example already the sanitary measures planned to reopen their centers.
“Although it is too early to estimate the real impact of the situation on our annual results, we remain confident”, assured in a press release Jean-Marc Jestin, chairman of the Klépierre executive board, highlighting the low indebtedness of its group as well as the “high quality” of its centers.
Case by case on rents
However, the prospects of the two giants have further darkened this week in France, with the speech given Tuesday by the Prime Minister, Edouard Philippe, to detail the release from containment from May 11.
Philippe confirmed that all businesses should reopen, except bars and restaurants, but he made a major exception. Large shopping centers, over 40,000 square meters, may remain closed by prefects, as they can encourage customers to come from far away.
However, this is precisely the strategy of the giants of the sector: focus on a few large centers, with rich entertainment to the key, to make them places of “destination” over a wide radius.
For the time being, the large owners of shopping centers prefer to remember that the closure of large sites will not be systematic.
The federation of the sector, the CNCC, promised on Thursday to “understand the reasoning and calculation methods used and then to provide the answers expected by the prefects”.
But another pitfall continues to threaten the accounts of the sector. The traders’ federations insist on canceling their rents en masse, seeing it as a question of survival.
The government has obtained from the big owners that they cancel three months of rents for the smallest signs, those of less than ten employees, but it is far from satisfying the trade sector.
For their part, the owners of shopping centers stress that a massive cancellation would endanger their own model.
The sector is thus faced with a paradox. If he reassures on its economic solidity, it also weakens its main argument for refusing to cancel more rents, at the time when the executive appointed a mediator to calm the controversy.
“Klépierre has always attached particular importance to the long-term, balanced and long-term business relationships it maintains with brands,” promises the French group.
He explains studying the situations of his tenants on a case-by-case basis, as does URW, which more explicitly states “rent relief” for certain brands, in particular in catering.
afp / rp
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